This month the content most relevant to employment taxes and reward activities includes:
Employment related securities (ERS) – end of year return deadline
- The deadline for filing annual ERS returns, including nil returns, is 6 July 2024. It is worth noting that this year 6 July falls on a Saturday meaning the working-week deadline should be considered instead as Friday 5 July 2024.
- ERS returns must be submitted for every scheme that has been registered. Failure to submit by the above deadline may result in late filing penalties levied by HMRC on the employer.
- As an ERS scheme needs to be linked to a live PAYE scheme, if you are closing your PAYE scheme, you will also need to cease your ERS scheme. Once a scheme is ceased, an annual return must still be submitted for the tax year in which the final event date falls.
Service to check your State Pension forecast is now available
- Eligible men born after 5 April 1951 and women born after 5 April 1953, have until 5 April 2025 to pay voluntary National Insurance contributions (NICs) to make up gaps in their National Insurance record from 6 April 2006.
- HMRC have launched an enhanced online digital service that provides information to help decide whether to pay voluntary NICs based on which years are available and the cheapest or most beneficial years to pay.
Reporting profits on a tax year basis
- As mentioned in previous issues of our Employment Tax Update, all sole trader and partnership businesses must now report their profits on a tax year basis, beginning with the self-assessment return due by 31 January 2025 (which covers the 2023/24 tax year) and going forward.
- Any business that previously had a different accounting period must declare profits from the end of the previous accounting date in 2022 to 2023 up to 5 April 2024, with additional profits (after overlap relief) being transitional profit.
- HMRC have online interactive guides to help work out transitional profit.
- Profits incurred in the 2023/24 tax year can be reduced by any overlap relief which is entered on the 2023/24 self-assessment return. HMRC have an online service that informs taxpayers of any overlap relief available.
- HMRC have also provided further guidance and support on basis period reform and have published a YouTube video to assist taxpayers when filing their returns.
A warning for employment agencies using umbrella companies
- Spotlight 64 provides a list of signs that indicate whether an umbrella company might be operating a tax avoidance scheme.
- Employment and recruitment agencies need to be aware of the potential risks for using non-compliant umbrella companies, including potential penalties and reputational damage.
- Further information on this can be found on HMRC's guidance on how to reduce risks of using umbrella companies who operate a tax avoidance scheme.
Read the full May Agent Update (Issue 120).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.